SpaceX Is Reportedly Preparing to Absorb Tesla in the Largest Corporate Merger in History

A combined SpaceX and Tesla would dwarf Vodafone’s $183 billion USD takeover of Mannesmann as the largest merger ever.

Summary

SpaceX and Tesla are advancing negotiations on a historic merger that could be announced as early as December

The proposed deal is structured as SpaceX absorbing the automaker to create an unprecedented corporate leviathan

The massive combination faces severe geopolitical hurdles regarding aerospace defense contracts and Chinese manufacturing

According to a Bloomberg report, SpaceX and Tesla are rapidly advancing negotiations on a record-breaking merger that could be announced as early as December, though early 2027 remains under consideration. The proposed deal is structured as an absorption, with the aerospace company swallowing the automaker while negotiations determine exactly how many SpaceX shares Tesla investors will receive. Following its June IPO, SpaceX is currently valued at over $1.9 trillion USD, while Tesla commands an approximate $1.5 trillion USD valuation. Combining the two entities would mark the largest corporate merger in history, entirely dwarfing the previous record set by Vodafone’s $183 billion USD takeover of Mannesmann in 2000. After the publication of the report, Tesla’s stock price immediately increased by as much as 1.9%, though neither SpaceX nor Tesla provided a comment regarding the ongoing negotiations.

The mechanics of the deal hinge heavily on price and control terms. Elon Musk previously confirmed in October that both companies’ boards had established special committees to explore the merger, but the boardroom overlap is already deeply established. Ira Ehrenpreis, who currently chairs Tesla’s compensation and governance committees, has served on the SpaceX board since February. Tesla is scheduled to hold its annual shareholder meeting on December 3, where the exact directors required to approve the monumental deal are up for re-election. The upcoming ballot includes the re-election of Musk, chair Robyn Denholm and JB Straubel to terms extending through 2029. Crucially, the absorption structurally shifts ultimate corporate leverage, as Musk currently controls roughly 85% of SpaceX’s voting power through super-voting shares, a massive leap from his approximate 20% ownership of Tesla.

Beyond consolidating his corporate empire, the merger unlocks a staggering immediate payout for Musk. Under the specific change-in-control terms embedded in his 2025 CEO award, an absorption would entirely drop operational milestones, run the market cap test at the negotiated deal price and cause his earned shares to vest immediately. If the deal ends up valuing Tesla at $2 trillion, it would instantly clear the first market cap tranche of that 2025 compensation award. Furthermore, his 286 million restricted shares from an earlier 2018 compensation package will also accelerate their vesting upon a change in control.

Executing the historic combination faces severe regulatory hurdles, primarily driven by a massive conflict between SpaceX’s sensitive government defense work and Tesla’s heavy reliance on its Chinese manufacturing footprint. A primary obstacle in the current negotiations is figuring out exactly how to ring-fence Tesla’s sprawling China business. The Giga Shanghai factory is the undisputed backbone of the automaker’s global supply chain, manufacturing more than half of Tesla’s cars and shipping 67,829 vehicles in October alone. Attempting to seamlessly reconcile a heavily shielded American defense contractor with a brand so thoroughly tethered to Chinese industrial outputs creates an unprecedented geopolitical tightrope.

This strategic friction explains the highly aggressive timeline, as Bloomberg reports the companies want to officially close the merger before President Trump leaves office. The accelerated push directly anticipates impending regulatory hostility, driven by severe scrutiny from a newly Democratic Congress that is expected to closely examine Musk’s sprawling business empire and his political ties.